The Weekly CEF Roundup will be put out at the start of each week to summarize recent price movements in closed-end fund (CEF) sectors in the last week, as well as to highlight recently concluded or upcoming corporate actions on CEFs, such as tender offers. Most of the information has been sourced from CEFInsight or the Closed-End Fund Center. I will also link to some articles from Seeking Alpha that I have found for useful reading over the past week. The searchable tag for this feature is "cildoc".
Weekly performance roundup
(Note: As I did not do last week's roundup, this week's roundup will reflect the performance statistics versus two weeks ago.)
CEFs continued to lag the broader market over the past two weeks. Overall, 12 out of 32 sectors were positive (down from 25 two weeks ago), and the average price return was -0.29% (down from +0.68%). MLPs staged a strong rebound over the past two weeks, with a +2.77% return on price. The next 3 leaders on price were all muni funds (0.75-1.15% return). International equities generally underperformed over the last two weeks, with Latin American equities (-3.21%) being the worst performers.
(Source: Stanford Chemist, CEFConnect)
On an NAV basis, 18 out of 32 sectors were positive (down from 23 two weeks ago), with an average return of +0.04% (down from +0.33%). MLPs led with a +2.42% NAV return, while the losers were again populated with international equities.
(Source: Stanford Chemist, CEFConnect)
The sector with the highest premium is preferreds (+0.33%), while the sector with the highest discount is Latin America equities (-11.62%). The average sector discount is -5.94% (up from -5.63% two weeks ago).
(Source: Stanford Chemist, CEFConnect)
Mortgage bond funds showed the largest premium/discount increase (+0.43%), while global equity dividends showed the largest premium/discount decline (-1.40%).
(Source: Stanford Chemist, CEFConnect)
The sector with the highest 1-year z-score is mortgage bond funds (+0.51), while the sector with the lowest z-score is health & biotech (-1.47).
(Source: Stanford Chemist, CEFConnect)
The sector with the highest yield is MLPs (10.93%), followed by multi-sector income (8.71%), global growth & income (8.56%), global equity dividend (8.54%), and limited duration (8.09%). Discounts and z-scores for the sectors are included for comparison.
(Source: Stanford Chemist, CEFConnect)
Recent corporate actions
These are from the last month and are quoted from CEFInsight; any new news in the past week has a bolded date:
December 6, 2017 | The Board of Trustees of The Gabelli Global Small and Mid-Cap Value Fund (NYSE:GGZ) is pleased to announce the completion of its transferable rights offering in which more than 2.5 million common shares will be issued, resulting in proceeds to the Fund of approximately $29.7 million. Pursuant to the Offer, the Fund issued one transferable right (a “Right”) for each common share of the Fund to shareholders of record (record date shareholders) as of October 23, 2017. Holders of Rights were entitled to purchase common shares by submitting three Rights and $11.50 for each share to be purchased (the subscription price). The Offer expired at 5:00 PM Eastern Time on December 5, 2017 and the Rights no longer trade on the New York Stock Exchange. Preliminary results indicate that the Fund received total subscriptions of approximately $110.5 million (including over-subscription requests and notices of guaranteed delivery) for 373% of the 2,578,483 shares available to be issued pursuant to the primary subscription. Approximately 77% of the shares to be issued were subscribed for in the primary subscription. The over-subscription requests exceeded the over-subscription shares available. As a result, the available over-subscription shares will be allocated pro rata among those fully exercising record date shareholders based on the number of Rights originally issued to them by the Fund. The new common shares will be issued on or about December 12, 2017.
November 28, 2017 | City of London Investment Group PLC filed a 13D/A on Nov. 28 disclosing that it had reduced its holdings of the Morgan Stanley India Investment Fund, Inc. (IIF) to 4,052,752 shares (28.4%) as a result of a series of sales from Oct. 10 to Nov. 24 (-231,593 shares). CLIM filed a 13D/A on Nov. 28 disclosing that it had increased its holdings of The China Fund, Inc. (CHN) to 4,080,481 shares (26.0%) as a result of a series of purchases from Oct. 26 to Nov. 24 (+160,578 shares).
November 27, 2017 | On Nov. 27, Saba Capital Management L.P. filed a 13D/A on Nov. 27 disclosing that it held 8,715,302 shares (8.1%) of the Alpine Total Dynamic Dividend Fund (AOD), and had submitted a shareholder proposal requesting that the fund's Board (as described in Item 4) take all necessary steps in its power to declassify the Board so that all directors are elected on an annual basis starting at the next annual meeting of shareholders. Such declassification shall be completed in a manner that does not affect the unexpired terms of the previously elected trustees. SCMF II, a Saba Capital fund, also submitted a notice of intent to nominate one person for election to the Board of Trustees, as well as to bring a proposal substantially similar to that described above to be considered by shareholders at the fund's 2018 Annual Meeting.
November 20, 2017 | KKR Income Opportunities Fund (KIO) today announced the results of its transferable rights offering. The Offer commenced on October 19, 2017 and expired on November 17, 2017. The Offer entitled the rights holders to subscribe for up to an aggregate of 5,085,079 common shares of beneficial interest of the Fund . The subscription price was $14.87 per Common Share, which was equal to 82% of the Fund’s net asset value per Common Share at the close of trading on the New York Stock Exchange on the Expiration Date which was greater than the formula of 90% of the average of the last reported sales price of a Common Share on the NYSE on the Expiration Date and each of the four (4) immediately preceding trading days. The Offer was over-subscribed. Common Shares will be issued promptly after completion and receipt of all shareholder payments and the pro-rata allocation of Common Shares in respect of the over-subscription privilege.
November 13, 2017 | Clough Global Dividend and Income Fund (GLV), Clough Global Equity Fund (GLQ) and Clough Global Opportunities Fund (GLO) (each, a “Fund” and collectively, the “Funds”), which are advised by Clough Capital Partners L.P. (the “Adviser”), announced today the preliminary results of the tender offers for up to 37.5% of each of GLQ’s and GLO’s respective outstanding common shares of beneficial interest and up to 32.5% of GLV’s outstanding common shares of beneficial interest, which expired at 5:00 p.m., New York City time, on November 10, 2017. Based upon preliminary information, approximately 4,978,971, 9,911,558 and 31,425,351 shares were tendered for GLV, GLQ and GLO, respectively. Due to the fact that the number of shares tendered exceeded the number of shares the Funds offered to purchase, the Funds will purchase the maximum percentage of outstanding shares they previously announced on a pro-rata basis in accordance with the terms of the Offer to Purchase. The actual number of shares to be purchased for each Fund is anticipated to be announced after the expiration of the period for delivering shares tendered by guaranteed delivery.
November 10, 2017 | RiverNorth Opportunities Fund Inc. (NYSE: RIV) is pleased to announce that it will issue a total of 1,564,710 new shares of common stock (the “Common Shares”) as a result of the Fund’s rights offering which expired on November 9, 2017 (the “Expiration Date”). In response to high investor demand, the Board of Directors of the Fund elected to exercise the Fund’s over-subscription privilege in full (as described in the Fund’s Prospectus dated October 10, 2017) thereby increasing the Common Shares available for subscription by 25% over the primary offering. The total new Common Shares to be issued will consist of 1,251,768 shares issued related to the Fund’s primary subscription of shares and 312,942 shares issued related to the Fund’s secondary over-subscription of shares. The secondary over-subscription shares will be allocated pro-rata among record date stockholders who submitted over-subscription requests based on the number of rights originally issued to them by the Fund. The subscription price of $19.54 per share was established on the Expiration Date, which represented 95% of the market price per Common Share, based on the average of the last reported sales price of a Common Share on the New York Stock Exchange for the five trading days preceding the Expiration Date. The Common Shares to be issued in connection with the rights offering will be entitled to participate in the Fund’s November 2017 announced distribution.
Upcoming corporate actions
These are quoted from the Closed-End Fund Center or CEFInsight; any new news in the past week has a bolded date:
December 5, 2017 | The Turkish Investment Fund, Inc. (NYSE: TKF) (the “Fund”) announced today that it will close its share register books at the close of business on December 22, 2017 (the “Effective Date”) and that trading of the Fund’s stock on the NYSE will be suspended before the market opens on December 26, 2017. The proportionate interests of stockholders in the assets of the Fund shall be fixed on the basis of their respective holdings at the close of business on the Effective Date, and the Fund expects to make a final liquidating distribution to stockholders as of the Effective Date on or about December 29, 2017.
October 25, 2017 | The Board of Directors of The Gabelli Equity Trust Inc. (GAB) has approved a transferable rights offering which would allow the Fund’s record date common shareholders to acquire additional shares of common stock. Each shareholder will receive one transferable right for each share of common stock held on the record date (November 6, 2017). Seven Rights plus $5.50 will be required to purchase one additional share of common stock. Record date shareholders who fully exercise their Primary Subscription Rights will be eligible for an over-subscription privilege entitling these shareholders to subscribe, subject to certain limitations and a pro-rata allotment, for any additional shares of common stock not purchased pursuant to the Primary Subscription. Rights acquired in the secondary market may not participate in the over-subscription privilege. The Rights are expected to trade “when issued” on the New York Stock Exchange beginning on November 2, 2017, and the Fund’s shares of common stock are expected to trade “Ex-Rights” on the New York Stock Exchange beginning on November 3, 2017. The Rights are expected to begin trading for normal settlement on the New York Stock Exchange (NYSE:GAB RT) on or about November 9, 2017. The Offering expires at 5:00 PM Eastern Time on Tuesday December 12, 2017.
October 24, 2017 | The New Ireland Fund, Inc. (NYSE: IRL) announced Oct. 24 that the new record date for its previously announced proposed transferable rights offering will be November 3, 2017. The Offer was postponed on October 4, 2017 pending effectiveness of the registration statement. The registration statement has been declared effective. The release provided a “Summary of Terms of the Offer.” Each shareholder will receive one transferable right (the “Right”) for each share of common stock held on the record date of November 3, 2017, and each holder of Rights is entitled to subscribe for one new share of common stock for every three Rights held (1-for-3). The subscription price will be determined on the expiration date, December 6, 2017, based on a pricing formula equal to 92.5% of the average closing price of the Fund’s shares of common stock on the New York Stock Exchange on the expiration date and the four preceding trading days. Record date shareholders who fully exercise their Rights will be eligible for an over-subscription privilege entitling those shareholders to subscribe for any additional shares of common stock not purchased pursuant to the primary subscription. In addition, the Fund may issue to record date shareholders additional shares pursuant to a secondary over-subscription privilege. The Rights are expected to trade “when issued” on the New York Stock Exchange beginning on November 1, 2017, and the Fund’s shares of common stock are expected to trade “Ex-Rights” on the New York Stock Exchange on November 2, 2017. The Rights are expected to begin trading for normal settlement on the New York Stock Exchange (NYSE: IRL.RT) on or about November 8, 2017. A definitive announcement on the commencement of the Offer and the record date will be made through a prospectus and prospectus supplement. The final terms of the Offer may be different from those set out above. In addition, the release noted that: “The Offer is intended to increase the assets of the Fund available for investment, enabling the Fund to take advantage of attractive investment opportunities consistent with its investment objective and strategies without having to reduce existing Fund holdings. In addition, increasing the assets of the Fund is expected to result in certain economies of scale which may lower the Fund’s expense ratio.” For more detail, see the release posted at: The New Ireland Fund.
Recent activist or other CEF news
These are from the last month and are quoted from the Closed-End Fund Center or CEFInsight; any new news in the past week has a bolded date:
December 4, 2017 | Legg Mason BW Global Income Opportunities Fund Inc. (the “Fund”) (NYSE:BWG) announced today that the Board of Directors of the Fund has approved a change to the Fund’s name. Effective December 29, 2017, the Fund’s name will be changed to BrandywineGLOBAL – Global Income Opportunities Fund Inc. The Fund’s shares of common stock will continue to trade under its existing New York Stock Exchange symbol “BWG”; however its CUSIP has changed from 52469B100 to 10537L104. The name change will not have any impact on the Fund’s investment objectives or strategies.
December 41, 2017 | Effective Dec. 1, Aberdeen Income Credit Strategies Fund (ACP) became the new name for the former Avenue Income Credit Strategies Fund. The fund's new investment adviser, Aberdeen Asset Managers Limited ("AAML") and sub-adviser, Aberdeen Asset Management Inc. ("AAMI"), assumed responsibility with effect from December 1. The fund's investment objective and ticker will remain the same.
Distribution changes this month and next
These are sorted in ascending order of distribution change percentage. Funds with ex-dates in the current and in the next month are included. Note that changes of less than 5% are not listed, as those are considered to be minor. Any distribution declarations made this week are in bold. In this week's edition, I've also added monthly/quarterly information as well as yield, coverage (after the boost/cut), discount and 1-year z-score information for newly added funds. However, note the yield, coverage, discount and z-score information will not be updated every week. I've separated the funds into two sub-categories, cutters and boosters, arranged in descending order of distribution change magnitude.
(Note: Wading through the database to sort through cutters and boosters is particularly difficult in December due to many CEFs paying out special distributions, which messes with the calculations as well as CEFConnect. If there are any mistakes or omissions, please let me know!)
- -16.1%: (BFO) BlackRock Florida Municipal 2020 Term Trust cuts from $0.031 to $0.026 monthly (ex-date Dec. 11, announced Dec. 1). Yields 2.11%, -0.34% discount, z-score -1.3, coverage 111% (as of 12/8).
- -13.0%: (MUC) BlackRock MuniHoldings California Quality Fund cuts from $0.0535 to $0.0615 monthly (ex-date Dec. 11, announced Dec. 1). Yields 4.36%, -5.40% discount, z-score +0.5, coverage 104% (as of 12/8).
- -11.8%: (NCA) Nuveen California Municipal Value Fund cuts from $0.034 to $0.03 monthly (ex-date Dec. 14, announced Dec. 1). Yields 3.41%, +0.57% premium, z-score +0.3, coverage 102% (as of 12/8).
- -10.6%: (BSE) BlackRock New York Municipal Income Quality Trust cuts from $0.052 to $0.0465 monthly (ex-date Dec. 11, announced Dec. 1). Yields 4.22%, -11.63% discount, z-score -2.0, coverage 105% (as of 12/8).
- -10.3%: (NUM) Nuveen Michigan Quality Municipal Income Fund cuts from $0.0535 to $0.048 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.28%, -12.99% discount, z-score -1.9, coverage 107% (as of 12/8).
- -8.5%: (NQP) Nuveen Pennsylvania Quality Municipal Income Fund cuts from $0.0585 to $0.0535 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.77%, -12.19% discount, z-score -1.8, coverage 107% (as of 12/8).
- -8.5%: (NCB) Nuveen California Municipal Value Fund 2 cuts from $0.059 to $0.054 monthly (ex-date Dec. 14, announced Dec. 1). Yields 3.69%, +7.46% premium, z-score +0.9, coverage 104% (as of 12/8).
- -8.3%: (JMM) Nuveen Multi-Market Income Fund cuts from $0.036 to $0.033 monthly (ex-date Dec. 14, announced Dec. 1). Yields 5.28%, -8.25% discount, z-score +0.6, coverage 95% (as of 12/8)
- -8.3%: (NAZ) Nuveen Arizona Quality Municipal Income Fund cuts from $0.054 to $0.0495 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.04%, +0.41% premium, z-score +0.5, coverage 110% (as of 12/8).
- -8.3%: (NMT) Nuveen Massachusetts Quality Municipal Income Fund cuts from $0.0545 to $0.05 (ex-date Dec. 14, announced Dec. 1). Yields 4.18%, -2.78% discount, z-score +0.7, coverage 103% (as of 12/8).
- -8.1%: (BBF) BlackRock Municipal Income Investment Trust cuts from $0.07237 to $0.0665 monthly (ex-date Dec. 11, announced Dec. 1). Yields 5.48%, +1.39% premium, z-score -0.2, coverage 103% (as of 12/8).
- -7.8%: (NAN) Nuveen New York Quality Municipal Income Fund cuts from $0.058 to $0.0535 monthly (ex-date Dec. 11, announced Dec. 1). Yields 4.60%, -7.74% discount, z-score -0.4, coverage 104% (as of 12/8).
- -7.6%: (NYV) Nuveen New York Municipal Value Fund 2 cuts from $0.046 to $0.0425 monthly (ex-date Dec. 11, announced Dec. 1). Yields 3.51%, -3.79% discount, z-score -1.4, coverage 103% (as of 12/8).
- -7.1%: (JHA) Nuveen High Income December 2018 Target Term Fund cuts from $0.035 to $0.0325 monthly (ex-date Dec. 14, announced Dec. 1). Yields 3.94%, -1.69% discount, z-score -1.7, coverage 111% (as of 12/8).
- -6.9%: (NRK) Nuveen New York AMT-Free Quality Municipal Income Fund cuts from $0.051 to $0.0475 (ex-date Dec. 14, announced Dec. 1). Yields 4.37%, -10.01% discount, z-score -1.5, coverage 106% (as of 12/8).
- -6.3%: (NUO) Nuveen Ohio Quality Municipal Income Fund cuts from $0.0555 to $0.052 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.21%, -11.42% discount, z-score -2.1, coverage 106% (as of 12/8).
- -5.7%: (JHD) Nuveen High Income December 2019 Target Term Fund cuts from $0.044 to $0.0415 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.98%, -2.34% discount, z-score -2.2, coverage 109% (as of 12/8).
- -5.6%: (NAC) Nuveen California Quality Municipal Income Fund cuts from $0.062 to $0.0585 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.80%, -7.11% discount, z-score -1.4, coverage 103% (as of 12/8).
- -5.0%: (NMY) Nuveen Maryland Quality Municipal Income Fund cuts from $0.05 to $0.0474 monthly (ex-date Dec. 14, announced Dec. 1). Yields 4.46%, -12.72% discount, z-score -1.9, coverage 101% (as of 12/8).
- +18.4%: (TY) Tri-Continental Corporation boosts from $0.2614 to $0.3094 quarterly (ex-date Dec. 20, announced Nov. 24). Yields 4.03%, discount -11.15%, z-score +1.1, coverage 23% (as of 12/8).
- +12.8%: (JHS) John Hancock Income Securities Trust boosts from $0.1934 to $0.2181 quarterly (ex-date Dec. 8, announced Dec. 1). Yields 5.99%, -5.08% discount, z-score +0.8, coverage 29% (as of 12/8).
- +8.1%: (JHI) John Hancock Investors Trust boosts from $0.3294 to $0.356 quarterly (ex-date Dec. 8, announced Dec. 1). Yields 8.26%, -6.05% discount, z-score -0.6, coverage 30% (as of 12/8).
- +7.0%: (GAB) Gabelli Equity Trust boosts from $0.15 to $0.16 quarterly (ex-date Dec. 7, announced Nov. 17). Yields 10.44%, coverage -1%, -5.84% discount, z-score -1.6 (as of 11/24).
CEF analysis from around Seeking Alpha...
Recommended reads are in bold.
Alpha Gen Capital discusses "Great Opportunities Emerging In The Muni CEF Space - Part I" (Dec. 6) and BKN in "A 5.03% Tax-Free Yield With Strong Capital Gains Potential" (Dec. 8)
Arbitrage Trader looks at JRO in "Nuveen Floating Rate Income Opportunity Fund: 7.84% Yield Protected Against Short-Term Interest Rates" (Dec. 1) and JFR in "Nuveen Floating Rate Income Fund: 7.30% Yield Protected Against Short-Term Interest Rates" (Dec. 7)
Left Banker asks "Which PIMCO CEFs Will Have A Special Distribution?" (Dec. 7)
Michael Foster Financial Services looks at "Muni Bonds Recover, Dollar Crash Reverses: CEF Weekly Update" (Dec. 10)
*Stanford Chemist presents "Introducing The Chemist's 'High-High-Low' CEF Report - October 2017" (Nov. 26), "Rights Offerings: Dates To Be Aware Of" (Nov. 27), "Muni Funds On Sale" (Nov. 30), "The Chemist's CEF Report, November 2017: CEFs Not Joining The Party" (Dec. 5)
*To subscribers: these link to the public version of the article. You will already have seen those articles 1 month ago in the members section.
Fear & Greed Trader presents "S&P 500 Weekly Update: Strong Price Action Amidst Sector Rotation Brings New Highs To The Major Indices" (Dec. 9)
Jeff Miller presents "Weighing The Week Ahead: Plenty Of Cross-Winds For Santa" (Dec. 10)
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